david kipping gewerblicher rechtsschutz webh.jpgann cathrin toennes gewerblicher rechtsschutz webh 1.jpg

Series: "Intellectual Property in the Digital Space – Metaverse, Blockchain, NFT & Co"

The Metaverse – how do I protect my brand identity in the virtual world?

The International Trademark Association (INTA) published a comprehensive report in April 2023 entitled "Trademarks in the Metaverse," which addresses the various challenges posed by the emergence of the Metaverse. In doing so, INTA identified a number of problem areas that need to be addressed, particularly with respect to the protection of intellectual property rights in this emerging digital world.

What's the problem?

As companies move into virtual worlds, NFT marketplaces and other Metaverse platforms, the more important it becomes to protect their brand identity and intellectual property within these virtual worlds as well. As with the advent of the Internet decades earlier, the emergence of the Metaverse presents companies with opportunities and possibilities, but also hosts challenges, particularly in terms of protecting and enforcing intellectual property rights.
Already, some fashion companies – such as Burberry, Gucci and Balenciaga, as well as lower-priced brands like Zara and H&M – are working with gaming platforms such as Roblox and Fortnite to offer "skins" (i.e. clothing or accessories) for avatars – for money, of course. Nike and Forever 21 even run their own virtual stores on the Roblox gaming platform.

  • fortnite balenciaga.jpg
  • roblox gucci.png
  • nike roblox 1 1.jpg
  • nike roblox 2.jpg
Top left: Balanciaga Skins in Fortnite (www.fortnite.com), top right: virtual Gucci hand bag in Roblox (www.polygon.com), bottom left: Nike's virtual world in Roblox (www.sneakerfreaker.com), bottom right:  Nike's virtual world in Roblox (www.sneakerfreaker.com) 

According to Roblox, more than 62 million such garments and accessories were designed and offered on its platform between January and September 2022. Furthermore, the majority of the gaming platform Fortnite's revenue (an estimated 20 billion since its launch in 2017 until the end of 2021) comes from the sale of digital avatars, skins, backpacks and dances. This ultimately makes Epic Games, the developer of Fortnite, one of the biggest fashion sellers in the world, surpassing giants like Dolce & Gabbana and Prada.

But it's not just fashion companies that have recognised the potential of these virtual worlds. The Ferrari 296 GTB, for example, is the first licensed car on the Fortnite platform. The U.S. fast-food chain "Chipotle Mexican Grill" regularly organises virtual events on Roblox, using virtual games and virtual merchandise to attract attention and retain customers.

However, the Metaverse - like the Internet before it – not only opens the way for technological progress, but also provides an additional opportunity for trading in infringing (virtual) goods. It is easy for a tech-savvy person to copy virtual products or create virtual replicas of real products - protected by design, copyright or trademark law – and then distribute them online for use in virtual worlds. This, combined with the significant market potential of these virtual goods – some of which trade at significantly higher or at least the same prices as their real-world counterparts – means that copyright infringements, trademark infringements and unauthorized imitations are virtually inevitable. Not only that, they are already happening.

The Hermès case

Perhaps the most famous case is the Hermès case, in which Hermès sued a digital designer for selling NFTs (non-fungible tokens) of the company's Birkin handbag. The artist had created images of fur Birkin handbags and sold them as NFTs under the name "MetaBirkin". The NFTs traded for up to $24,000 in the meantime. Hermès then sued the designer for trademark infringement and won in the first instance.

  • birkin bags.png
  • taschen nft.png
Leff: Birkin hand bag by Hermès (www.luxussachen.com), right: NFTs by designer Mason Rothschild (news.artnet.com)

Although the Hermès case is the best known, it is far from being an isolated case. Particularly on NFT marketplaces, it can be observed time and again that people create, offer and sell NFTs in violation of third-party design, copyright or trademark rights. This may be due to the fact that this is a new medium which, similar to the advent of the Internet, many people believe to be a legal vacuum where you can do whatever you want. This is not the case, of course. Although many questions remain unanswered, it is clear that intellectual property rights also exist in the virtual world.

So what is to be done?

Since such infringements can of course have a negative impact on a company's reputation – just as in the real world – it is advisable for companies to keep an eye on and monitor this new market of NFT marketplaces and 3D virtual worlds, so that they can take proactive action against such infringements. In this context, many of these so-called Metaverse platforms, like traditional online marketplaces, offer mechanisms for reporting intellectual property infringements. In most cases, they accept the complaints and take appropriate action so that infringements can be easily and effectively removed.

In addition, companies should consider registering their existing trademarks for some Metaverse-related classes of goods and services, even if they are not yet planning to enter the Metaverse themselves. This makes sense because it is still completely unclear whether registrations for physical goods will also protect against virtual imitations. This depends on the answer to the question whether virtual goods (e.g. a virtual garment) are identical to their real counterpart (i.g. a real garment) in terms of trademark law or not. There are arguments for both sides, but if the courts or trademark offices deny the identity of goods in the future, it is likely that only very well-known brands will be able to invoke their trademark rights on the basis of exploitation of reputation. In addition, it can already be observed that third parties are attempting to register existing trademarks for these new classes of goods. It may be possible to have such trademarks – if they are registered – cancelled again later. However, this is costly and time-consuming and can easily be avoided by filing your own trademark applications.

Furthermore, the Metaverse also brings new domains, such as .crypto .metaverse or .ether. It is not yet clear how these blockchain domains can be used in the future. It is likely that they will function similarly to conventional domains as an address system. What is important, however, is that these domain names are already up for graps. Unlike conventional domains, however, there is no central arbitration body to resolve trademark issues or similar issues for these blockchain domains. This means that it is almost impossible to get a domain name back as the rightful trademark owner once it has been taken. For this reason, companies should consider registering one or more blockchain domain names in their name.

In summary, understanding the challenges, monitoring the Metaverse, and being proactive in this area will enable companies to succeed in this new space while minimising risks and maximising opportunities. The Metaverse holds tremendous potential, and companies that take advantage of its opportunities while protecting their intellectual property rights will thrive in the age of the Metaverse.

See also the other articles of our series "IP protection in the Digital Space - Metaverse, Blockchain, NFT & Co.":

The Metaverse - opportunities and risks

The Metaverse - three key tips for companies to avoid becoming infringers


1:1. This is how we work together. You decide upon a competent partner; he/she will then remain your point of contact. > more